STMB exceeds expectations, analysts upgrade forecasts
KUALA LUMPUR:Malaysia Keluarga Bhd’s (STMB) first quarter of 2019 (1Q19) exceeded expectations, leading analysts to raise their full-year forecasts on the company.
In 1Q19, STMB recorded a profit after tax, amortisation, and minority interest (PATAMI) of RM96.4 million, generally beating consensus’ and analysts’ expectations.
MIDF Amanah Investment Bank Bhd’s research arm (MIDF Research) noted that STMB registered a continuous sterling growth of 38.3 per cent yearon-year (y-o-y) for its 1QFY19 PAZTAMI.
It also noted that STMB had been growing at double-digit rate for six consecutive quarters since 4QFY17. It also saw a big jump of 71.7 per cent y-o-y in 3QFY18 after the launch of its online sales portal and the strengthening ties with its bank partners.
STMB’s 1QFY19 both gross and net earned contributions grew by 39.7 per cent y-o-y and 41.9 per cent y-o-y to RM707.1 million and RM601.1 million respectively, attributed to the increase of 55 per cent y-o-y and 12 per cent yo-y in gross earned contributions from both its Family and General Takaful businesses respectively.
MIDF Research pointed out that the key growth drivers in Family and General Takaful continued to be higher sales from creditrelated products and fire class respectively.
“We believe the stellar growth rate in STMB’s Family Takaful business was due to its strengthened bank partnerships in which we observed a five-year compound annual growth rate of 22 per cent in its bancatakaful new business production.
“In addition, the group also managed to grow its investment income by 13.2 per cent y-o-y to RM85.4 million as a result of improvement in equity and higher profit from Islamic debts securities,” it opined.
In a separate note, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) believed that STMB has its growth strategy in the right place.
“From an earlier analysts’ briefing, management had mentioned that establishing the company as the preferred insurance partners for several major Islamic banking institutions could open opportunities for cross selling its products.
“It was previously guided that the new partnerships commenced in 4Q18.
“We believe that this was the main contributor to the rise in the Family Takaful’s credit protectionrelated products, which is already the lion’s share of all the group’s products,” it explained.
Furthermore, it highlighted that with Bank Negara Malaysia’s target of increasing the country’s Islamic finance mix to 40 per cent by 2020 (2018 estimated at 32 per cent), this could translate to more transactions with the above Islamic banking institutions.